China inflation rises to 3.2% in February

CHINESE inflation rose to 3.2 per cent in February, the National Bureau of Statistics says, hitting a 10-month high and ahead of market expectations.

The increase in the consumer price index - a main gauge of inflation - was a spike from January's 2.0 per cent and the highest since April last year, when it stood at 3.4 per cent, data showed on Saturday.

It was also ahead of the median forecast of 3.0 per cent in a poll of 14 economists by Dow Jones Newswires.

Month on month the index rose 1.1 per cent, its highest increase in 13 months, the bureau said, with food prices a significant driver of the rise.

China has set its inflation target for this year at 3.5 per cent, lower than last year's goal of 4.0 per cent but higher than the actual inflation rate for 2012, which stood at 2.6 per cent.

"China is still under considerable inflationary pressure this year," outgoing Premier Wen Jiabao said this week in his "work report" to the opening of the National People's Congress, China's annual parliamentary session.

Zhang Zhiwei, an economist with Nomura International, said the rise in inflation was mainly due to China's loose monetary policy to spur growth and a consumer spending spree during the Lunar New Year holiday, which fell in February this year.

"If monetary policy remains at the current loose stance, CPI in 2013 will likely be much higher than the 3.5 per cent target set in the National People's Congress," he said.